Here’s what I believe is “the least advertisers and YouTube partners need to know” about sponsored videos via YouTube “stars”:

YouTube hasn’t yet, to my knowledge, deleted a video or terminated a partner over this. They have the right, but don’t want to alienate the portion of banwidth (partners) that is revenue producing and keeps audiences returning.

It’s really unethical for an advertiser to get an idea about a YouTube “star” from Google/YouTube sales person, and then circumvent YouTube to avoid media spending. I’ve said no to the terms of one attractive ad deal when I learned that my Google advocate (who brought me to a leading brand) was being “shut out” of a deal he created. We’re still working it out.

A sponsored video should never be “monetized” with additional overlay (InVideo) or Google text ads. This could create conflicting advertisers, which is good for neither YouTube or the sponsor (if you’re Coke commissioning a sponsored video, do you really want to see a Pepsi pop-up ad)?

When a partner cuts a deal directly with an advertiser, the distributor (YouTube) is “shut out.” Therefore YouTube has no incentive to promote the video through a variety of means now available to other “monetized” content. This isn’t sustainable or scalable.

Eventually we’ll have ways to scale programs… and ensure the partner, YouTube and advertiser benefit. One way might include a sponsor also buying InVideo ads… or other pay-per-view, pay-per-click, pay-per-impressions to help get the video scale beyond the partner’s audience. This will help a sponsor’s video with a specific partner get far more reach, and ensure that YouTube as the distributor is fairly compensated for promoting and paying that bandwidth bill.

Thanks for the congratulations, Ms. Daisy Whitney. Glad you’ve got a mess full o’ sponsors yourself, and I applaud their targeted marketing (versus the old “rent an ignored booth at the giant trade show” method).

Here’s a sneak preview of the new NaltsConsulting site. It needs some work, and the name is rather dull. But I’ve had a number of people advise on sticking with the Nalts brand.

Blogtv.com announced a new “best of” section (see blogtv’s blog) and has created a forum for popular “weblebrities” to broadcast live to their “fans.” Seems the most popular blog.tv channels are, not coincidentally, popular YouTubers.

PhillyD? Sxephil? HappySlip? WhatTheBuck? DaveDays?

While YouTube is the defacto site for sharing videos, there’s no way to “go live” via video, and YouTube was careful with the media to represent YouTube Live as a one-time promotion (perhaps in fears of appearing as a network competitor).

Meanwhile, Blog.tv gives these people a tool to connect with audiences real-time, and make money (stars are reportedly paid as much as a dime per viewer). So it appears to be a profitable tool for video creators, and as a result they’re promoting their live sessions via YouTube.

How long before YouTube decides to provide this tool to its “partners” and audiences? If the average viewer stays for 5-10 minutes (that’s a guess), that’s plenty of time to serve ads.

And mama YouTube don’t like to be left out of ad revenue, dat’s fo sho.

What do you think? Should YouTube leave this area alone, or buy blogtv and capitalize on it? Blogtv, while getting some press at launch, is mostly “off the grid” from a media perspective, unlike Twitter (all the rage lately). So maybe Google instead decides to build its own live-chat “one to many” forum (Google chat is a step in that direction, although mostly for one-to-one video communication). Or will a live broadcast format appear like an arrow over the bow of the networks? And is it even consistent with the Google mission to organize the world’s information?

Postscript: I had every intention of doing my own Nalts blogtv channel, but there are three problems. First, I’m not very good about punctuality. Second, the kids would be screaming in the background. Third, I’m not sure I’ve got the “thang” for live broadcasts. I find them rather dull (unless carefully formatted), and if I can’t keep myself interested how can I keep an audience?

Marketers and their agencies really shouldn’t talk directly to YouTube “stars.” I say that with some authority, since I’m both a product director and a guy who’s crappy videos have been seen 65 million times. You see, the marketer in me is decisive, impatient, driven to move sales and “target” customers. The creator in me is sensitive, procrastinating, egoistic and temperamental.

My sister, a news producer, lived in NYC and California, and refers to the rest of the country as “fly by states.” Indeed, the impatient Madison Avenue and expressive Hollywood are coasts apart, and that’s perhaps out of necessity.

I couldn’t disagree more. I work for a very large, successful media company that has executed 30-plus campaigns (across multiple brand categories) using YouTube talent like the ones described in your post. I can assure you that what we learned is very simple and straight-forward: YouTube celebs can attract people to watch their videos, but they can not deliver against a well-defined set of business objectives. Why? Because these YouTubers are self-absorbed amateurs grappling for 15-minutes of fame. They were inconsistent, expensive and difficult to work with. Worst of all, none of our campaign goals were achieved because the audiences were mostly generated by “bots” – maybe that’s what they call “views” in their world.

Janet’s story isn’t unique, and indeed many YouTube “weblebrities” are sudden (and temporary) pop icons, and can hardly make it to Blockbsusters on time for their shift, much less deliver for a corporate “branded entertainment” assignment. Some can attract a crowd (so can a a loud bipolar person in the park), but can’t find the delicate balance between entertainment and promotion. The result is a crappy cable-tv looking advertisement, or an entertaining video that doesn’t increase awareness, intent or purchase. Yet the vitality of sponsored videos is dependent on the balance, otherwise nobody wins.
As a marketer I know that it’s not scalable for brands/agencies to work individually with YouTube stars. As marketers awaken to online-video “stars” influence and reach, we’ll see more sponsored videos. That’s one of the reasons why, despite doing a lot of direct work for brands, I like working through Hitviews. Brokering between brands and YouTube stars is tough to do well even when it’s a company’s sole focus, and if there are other companies like Hitviews I’m not aware of them.

I am not aware of any credible YouTuber partners using “bots” to drive views (which is hard to do, and would certainly breach their contract with Google). But I do think Janet’s experience has some merit, and I believe a value-adding intermediary is vital. Someone has to translate the brand objectives into terms that captivate the creator, and keep them focused. More importantly, someone has to know whose side to take when there’s a conflict. If the “star” is being ridiculous, then they need to be told so diplomatically. In other cases, the client may have an unrealistic sense of how promotional the videos should be.

There are so many critical factors to make this work — find the right talent, handling them appropriately, brokering edits — that it’s a specialty skillset that will grow in criticality as the medium matures.

There’s a continuum of video content online, and it’s often misunderstood because we polarize each end. Let’s stop bifurcating, and look at 3 layers of video content. There are advantages to each one, and we’re missing opportunity in “the great debate” between “professional” (networks) and “user-generated content” (UGC).

Layer 1: Professional content (the only “safe” place to advertise): Advertisers, when they’re not convincing marketers to create their own content, are often urging them to buy ads around “safe” professional content. We don’t see as many ads swarming around such user-generated content (UGC) as cats pooping on skateboards, or dogs riding toilets. Of course the influx of ad dollars into the online-video medium (which is trending upwards while most other ad mediums trend downward) will create a problem. Either ads will get expensive, or online-video’s professional content will have to expand rapidly. True, we’ve seen a proliferation of quasi-pro content that is almost as good as television, and far better produced than most online-video. Unfortunately, that market is hurting more than any because it has neither low production costs or large audiences.

Layer 3: User-generated content (the cheap buy): UGC offers much lower CPMs, so you can reach a wider audience efficiently. You can target specific niches or demographics, and the UGC viewer is, frankly, easier to distract from their content. Want to get someone to respond to your stupid “shoot the monkey” banner ad?You’ll have better luck on a weather and gaming sites than on a professional site (the Wall Street Journal, where audiences are generally engaged in the editorial content). YouTube has limited its number of “partners” who receive a portion of online ads, however. There’s a lot of crap among UGC and a lot of it is inappropriate for ads or copyright infringements. At some point, it’s not worth YouTube’s time to filter creators with tiny audiences. That’s not to say my videos are better than the guy that just started posting on YouTube, of course. Given a random a

Layer 2: The Hidden Online-Video Layer: The hidden layer is the overlooked one between pro and UGC, so I’ve decided to call it “The Hidden Video Layer.” I’m creative like that. And I’ll have to say this 100 times before anyone listens. It’s real, it’s big, it’s important to advertising, and most marketers don’t know it exists. Let’s look at three examples.

If a YouTube partner (amateur) has a huge following (50 million views and 100K subscribers) on videos about videogames, we’d agree that it’s an incredibly smart place for ads and sponsorships selling the Wii or acne cream. There’s lots of ad inventory in that “hidden layer.” Fred — the most popular kid on YouTube — draws more daily views than many prime-time television shows. More importantly, when you aggregate the views of the top 100 amateur creators, you’ll far exceed the audience of almost any daily television show! Little old Uncle Nalts may have 60 million cumulative views, but gets 100K plus views a day. But combine me with a few more, and you’ve got traffic that beats many websites (and the audience is more engaged).

If Yahoo saw fit to create a 24×7 “Lindsay Lohan Online-Video Show,” that’s where you’d want to sell your latest Lindsay Lohan action figure (handcuff accessories sold separately). The video content certainly wouldn’t need to be “professionally produced,” and arguably you’d want to keep costs down to $200 per minute. This channel, while not worthy of professional production, is certainly not UGC. BTW- I’m not advocating for a Lohan network any more than I understand Nancy Grace covering the Tot Mom the past 6 months. Jessica fell into a well, hon, and we’re over it.

To use a non-video example, your aunt’s blog about her daily struggle with foot fungus is somewhat different from the popular TechCrunch blog. But we call them both blogs, and media loooooves its recent stories about bloggers failing to make a living on the medium. Four years ago, we saw stories about brave editors ditching media corporations and starting their own profitable life as a blogger. It’s simple: a blog’s not a blog. And a video channel isn’t a video channel. If you’re advertising, you want to reach large but targeted audiences. That usually means you’re surrounding or interrupting professional content, but not for online video at this point in time. Making well-produced content doesn’t guarantee viewers any more than creating amateur content guarantees a lack of an audience. Make sense? I sometimes spend hours on these posts and minutes on my videos, and dozens will read these words while hundreds of thousands will see my videos. Bad example since neither are professional.

Now this “missing video layer” offers advertisers 8 unique distinctions. I’m holding up four fingers on each of my hands right now, and jumping up and down.

Established audiences. No smart producer or advertiser would try to build a new Fred show- Fred already has nearly one million people that have “subscribed” and are waiting for his next video. If I pitched “Fred” to NBC two years ago, I’d have been tossed from the building. But Fred usually gets far more views per video than almost any professional content online. Would you rather “roll the dice” by shooting a viral video, developing branded entertainment, or simply leverage Fred to reach “asses in seats”? Many amateur video creators on YouTube, for instance, have audiences that surpass those of entire video sites.

Loyal and Passionate Audiences: viewers consume their YouTube stars like zombies in pursuit of a brain. It’s an indisputable fact. If Fred starting wearing Madonna rings on his wrist, they’d be back in style.

Quality: It’s not “professional and TV-like,” but it’s good enough for the audience. I’d rather watch someone I like on a webcam than a boring sitcom or reality-show in HD. If you trust audiences will eventually migrate to “quality” content, then please reexamine what quality means in this medium (at least in 2009).

Relevance: Ad targeting is easier as we move deeper into amateur content. “The Onion” has brilliant comedy, but “You Suck at Photoshop” probably has a more specified demographic that helps brands target. You want to reach people that celebrate their adolescence (at any age) or soccer moms? Check out Nalts. But Uncle Nalts isn’t likely to deliver too many right-wing, wealthy, retired men to sell time share or cigars. Relevance is easier now that video content and audiences are growing and fragmenting. Growfragmenting. Want to sell toe fungus medicine? Go to a toe fungus blog, not a health ‘n wellness website. There’s a reason Google text ads outperform almost any targeted display media buy. Relevance. Unfortunately, this makes an ad buyer’s job quite complex and will require more creative treatments than television. But video makers take note: this means we’ll need more than three versions of our 60-second spot (default, gay, and the Hispanic/African American). And if creative budgets aren’t getting bigger, than amateur video creators are well poised.

Ad-Safe Content: Unlike regular UGC, most of “the hidden video layer” content is vetted to be ad friendly (a YouTube partner, for example, gets dumped if they break “terms of service” rules like being fowl or violating copyright laws). That’s as true for Nalts as it is for The Universal Music Group’s popular channel on YouTube.

Economic Sustainability: Most of “amateur stars” have low costs. So many are making a comfortable living while expensive video sites struggle (Funny or Die). As an advertiser, I’d rather do a deal with content or a distribution channel that is profitable.

Cost-Efficient Spends: You can saturate Fred’s channel with ads, or work with him and YouTube on a program that does far more than ads alone. Premium video creators, by contrast, simply need to charge higher CPMs given their higher cost-structure-per-view.

Scale: The deeper advertisers go into “the long tail” of video content the better their chances of being able to broaden and scale campaigns without sacrificing targeting & relevance. We may temporarily saturate some niches, but if there’s audience and advertiser demand, new creators will appear.

We’ve allowed ourselves — as viewers, advertisers, and creators — to obsess on the polars of the content continuum: From Oprah to “David After the Dentist.” From “Lost” to and “the giggling infant.” From “The Office” to “monkey smelling its finger.” There’s a lot in between.

There’s goals in them niche hills, advertisers. Gooolllllddd (he cackles with toothless grin and ominous, shaking index finger). Then again, during a gold rush I like selling shovels.

Who’s Nalts?

Kevin "Nalts" Nalty the only career marketer who also is one of YouTube's most viewed entertainers. Author of "Beyond Viral," Nalty is a sought-after speaker described as "passionate, engaging, provocative, and practical." Nalty consults in the area of digital marketing and emerging media, and has helped such leading brands as Starbucks, Fox Broadcasting, Kodak, MTV, Logitech, Panasonic, Crowne Plaza and Microsoft. To reach out, please see contact page.